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Sukuk in Turkey

We are very glad to inform you about the latest developments in Turkey. Below you will find some information about a communiqué regarding the Leasing Certificates. The Capital Markets Board of Turkey has announced on April, 1st that leasing certificates have finally entered to our financial market. According to the communiqué (Serial: III, No:43, published in the Official Gazette on April, 1st) issued by The Capital Markets Board of Turkey, private sector companies will be able to supply funds from capital markets by leasing certificates. The leasing certificate mentioned at the communiqué is an instrument similar to SUKUK which is also defined as ‘bonds without interest’. "SUKUK is the Arabic name for a financial certificate, but commonly refers to the Islamic equivalent of bond. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest." HOW THE SYSTEM WORKS ? In order to issue leasing certificates, Asset Leasing Companies (“ALC”) could be established as incorporated companies by brokerage houses, banks or resource enterprises. For the Banks, the comment of the Banking Regulation and Supervision Agency should be asked, before the establishment. The aim of the ALC is to earn leasing income by leasing the asset which has been taken over from the resource enterprises to the same resource enterprises; to issue leasing certificates based on this leasing income and to transfer the asset to the resource enterprises at the end of the leasing term. ALC can issue two types of leasing certificates: First one is issued to be offered to the public and the other one is issued to be reserved for special use or to be sold qualified investors. The details about the registrations and sales of the leasing certificates are stated at the communiqué. IMPORTANT POINTS ALC might take over more than one asset from a resource enterprises in one transaction; however ALC cannot take over more than one asset from different resource enterprises in transaction. ALC is not allowed to operate in any areas other than mentioned above. In addition, it is prohibited for them to become indebted, to get a bank loan by any means, to use the asset out of purpose and to establish any real rights on behalf of third parties. Also, the asset can not be transferred to anyone other than the resource enterprise that fulfils all obligations due to the leasing agreement. Furthermore the obligatory matters which should be added to the Articles of Association are also stated under the communiqué. For instance, it is obligatory for the A LC to state in their Articles of Associations that in the event of the Asset Leasing Company’s default, the relevant asset shall be transferred a third party/parties and the leasing income of such Asset shall be paid to the owners of the leasing certificates in proportion to their shares in the Asset. This document is a translation of the relevant Communiqué’s summary and does not involve the whole text. Please contact us for For Further Information. Gökmen Başpınar / Senior Partner Baspinar & Partners Law Firm gokmen.baspinar@baspinar.av.tr Tel : +90 212 465 66 99 - Fax : +90 212 465 36 99 Address : Istanbul Dünya Ticaret Merkezi A-1 Blok Kat: 6 No: 244 Yesilköy, Istanbul, Turkey